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Prior to beginning work on this assignment, read the following sections in your textbook: 9.1 to 9.6 and 9.9

Prior to beginning work on this assignment, read the following sections in your textbook: 9.1 to 9.6 and 9.9 in Chapter 9: Mass-Storage Structure. Finally, read the Operating System – Scheduling Algorithms tutorial (

Part 1:
To complete this assignment, consider the following scenario:

A disk drive has 300 cylinders, numbered 0 to 299. The drive is currently serving a request at cylinder 51, and the previous request was at cylinder 56. The pending requests are received in the following order: 72, 56, 103, 111, 17, 189, 236, 198, and 88.
Describe how the disk arm moves to satisfy all the pending requests for each of the following disk-scheduling algorithms. (Perhaps you create a diagram similar to the diagrams in Section 9.4 to support your explanation.)

Calculate the total distance (in cylinders) that the disk arm moves for each of the above disk-scheduling algorithms. Compare the algorithms and explain which algorithm is the most efficient (the shortest distance) for this scenario. Write a minimum of 250 words.

Part 2:

Compare the algorithms and determine which is the fairest for the next process in the queue. Explain why this algorithm will always be the fairest disk-scheduling algorithm.

Describe an example of circumstances where fairness would be an important goal. Describe a scenario where it would be important that the operating system be unfair. Write a minimum of 250 words.

The Scheduling Models paper

Must be a minimum of two double-spaced pages (500 words) in length (not including title, reference page, and diagrams) and formatted according to APA style as outlined in the Writing CenterLinks to an external site..
Must include a separate title page with the following:
Title of paper
Student’s name
Course name and number
Instructor’s name
Date submitted

Services Marketing (N1572) Alison McGregor & Maja Golf Papez 2018-2019 Term 2

Services Marketing (N1572)

Alison McGregor & Maja Golf Papez

2018-2019 Term 2


Write an essay of 1500 words (+/- 10%) including in-text citations but excluding the bibliography. Ensure that you support your discussion using the theory, and appropriately reference throughout from a range of sources, using Harvard referencing.

Answer the following question using essay format:

Focusing on one element of the extended marketing mix, evaluate the significance for services of either:



Physical evidence

And discuss the ways that businesses manage this element for value creation.

Ensure that your answer uses a range of examples.

The essay requires that you demonstrate understanding of the reasons for the use of the extending marketing mix for services through discussion of the element chosen, and the relevant academic discussion.  We will discuss a range of examples of services businesses throughout the course so it is expected that you will be able to use a range of relevant examples.

Please refer to the indicative assessment criteria below for this assignment.

Based on UG Assessment Criteria for year 3 essay

Mark %

Assessment Criteria




A mark in this range is indicative of outstanding work. Marks in this range are for answers that show all the attributes of excellent work but have substantial elements of originality and flair.



A mark in this range is indicative that the work is of an excellent standard for a module at year 3. The answer will demonstrate excellent levels of knowledge and understanding of the chosen element of the marketing mix, with useful references and competent application shown with relevant examples. This work will comprise all the qualities of good work stated below, with additional elements of originality and flair. The work will demonstrate a range of critical reading that goes beyond that provided on reading lists. Answers will be fluently written and include independent argument that demonstrates an awareness of the nuances and assumptions of the question, and examples will go beyond those discussed in class. Answers will make excellent use of appropriate detailed examples, and demonstrate competent referencing.



A mark in this range is indicative of that the work is of a good to very good standard for a module in year 3. Answers show a good level of knowledge and understanding of the chosen element of the marketing mix, with useful references and relevant examples. There will be understanding of relevant course material demonstrated through clear and supported argument. It will show evidence of wide and diverse reading and of being able to use ideas from this reading to support and develop arguments. Answers demonstrate good writing skills with organised and accurate referencing and bibliography, in the Harvard style. Arguments and issues are illustrated using relevant examples. There should be clear evidence of critical engagement with the issues or topics being analysed and how they apply in practice.




A mark in this range is indicative that the work is of a satisfactory to very satisfactory standard for a 3rd year module. Work of this quality will show clear knowledge and understanding of the chosen element of the marketing mix, with references and some relevant examples. Answers will focus on the question, include, and show evidence of understanding of the relevant basic works of reference, although at times may tend towards undeveloped argument or not clearly explained or supported assertions. The answer will demonstrate useful written work and/or analytical skills. It will be reasonably well structured and coherently presented. There is satisfactory use of referencing and a bibliography, although there may be some challenges. Arguments and issues are supported by examples, but these may not be clearly documented or detailed.



A mark in this range is indicative that the work is of an acceptable standard for a 3rd year module. Answers will show limited knowledge and understanding of the chosen element of the marketing mix, with limited references and/or examples. It will show evidence of some reading and comprehension, but the written work or answer may be weakly structured, cover only a limited range of the relevant material or have a weakly developed or incomplete argument. The work will exhibit weak written work or analytical skills. It may be poorly-presented without sufficient referencing and/or properly laid out bibliography,




A mark in this range is indicative that the work is below, but at the upper end is approaching, the standard required for a 3rd year module. It indicates weak work of an inadequate standard. This will be because the answer does not sufficiently answer the question, is weakly argued and supported or may be too short and is very poorly organized. It will show very limited knowledge or understanding of the relevant chosen element of the marketing mix and display weak writing and/or analytical skills with a tendency to be descriptive or just summarising arguments provided in teaching sessions. Written work will exhibit no clear argument, may have very weak spelling and grammar, very inadequate or absent references and/or bibliography and may contain factual errors.



A mark at this level is indicative that the work is far below the standard required for a 3rd year module. It indicates that the work is extremely weak and seriously inadequate. This will be because the argument is unclear or absent, there isn’t enough relevant information included or it doesn’t address the question asked. It will show little evidence of knowledge or understanding of the relevant course material and may exhibit very weak writing and/or analytical skills. It may be too short or have limited or inadequate referencing and lack of relevant sources in the bibliography.


Student absent or no script submitted

Services Marketing N1572 – AMcG

CORPORATE SOCIAL RESPONSIBILITY PRACTICES Introduction Corporate responsibility is a way for companies

Prior to beginning work on this assignment, read the following sections in your textbook: 9.1 to 9.6 and 9.9 Computer Science Assignment Help CORPORATE SOCIAL RESPONSIBILITY PRACTICES


Corporate responsibility is a way for companies or organizations to take responsibility for all the environmental and social impacts of the operations in their business. A study done in the year 2017 by Cone communications showed that more than 60% of Americans believed that businesses will drive environmental and social change if government regulations were absent. Around 87 percent of consumers surveyed were interested in purchasing a certain product where the company supported a certain issue that the consumers care about. Also, 76% of those interviewed said that they will never buy from a company that supports a certain issue that is against their beliefs (Szekely & Knirsch, 2005). Therefore, a robust corporate social responsibility program is crucial for a company as it offers an opportunity for the company to demonstrate its good corporate citizenship and also protect the company from any outsized risk. Such protection is achieved by looking at the entire environmental and social sphere surrounding the company. Adopting a good CSR keeps an organization ethical and accountable as it creates a filter for the activities and actions of a company (Moore, 1999). This movement of corporate social responsibility is aimed at encouraging organizations to be aware of the impacts brought about by their business on the society, including the environment and their own stakeholders. This ensures creation of business approach that creates sustainable development by facilitating delivery of social, environmental and economic benefits for all the stakeholders. This assay discusses various corporate social responsibility practices in various organizations and their relation to Daimler Company.

Characteristics of corporate social responsibility

Managing Externalies

One characteristic of CSR is the ability of a company to manage or internalize the externalities, where the externalities are the negative and positive side effects of the economic behavior of others on the organization/company (Jackson, 2011). An example of externality is environmental pollution where a company may voluntarily decide to invest in clean technologies that help in preventing pollution. Such approach is important since companies rely on employees, suppliers, local communities and consumers for survival and prosperity and hence the importance of the company taking the responsibility to prevent pollution that can affect such constituencies. For example; In Canada, various mining companies have adopted different corporate social responsibility strategies. These companies engage with the communities and groups since converting land sites into mines have a negative impact to the aboriginal communities that live near the sites. For this reason, many mining companies of Canadian origin engage in CSR with the local communities in order to minimize the adverse effects. For example; Comeco Corporation has taken the responsibility of overseeing education programs that are directed towards Aboriginal and northern people through their strategy known as Saskatchewan five-pillar.

Voluntary services

Another mining company known as Goldcorp Inc. makes positive impact on local communities by sponsoring special events and supporting health and education initiatives (Genesco, 2012). Another Canadian company called Soft rock minerals limited also supports schools, projects and festivals by giving out their finances (Ihlen, 2011). Daimler Company should prevent environmental pollution by ensuring that all its products including the Mercedes vehicles are recycled. The company can buy used vehicles once again from the customers and remanufacture them. Also the company may decide to lease the vehicles instead of selling them to customers for a given period of time with monthly fee. Such approach will lower burden to the customers as there will be no more maintenance fee or waste after the vehicle reaches its end life.

Customer satisfaction

Unilever Company also implements systematic strategy that is aimed at fulfilling its CSR. The strategy helps the company’s citizenship ideals such as satisfying the interests and expectations of consumers. Through the strategy, the company puts consumers above all other stakeholders and also maintains business sustainability. The corporate strategy addresses various interests of consumers, employees, investors, suppliers and communities (Genescu, 2012). The strategy ensures that the products are of high quality and affordable price to take care of the consumer. Such is important since the consumers directly determine the company’s profits. Ensuring that the customers are satisfied increases the revenues after repeat sales and hence by satisfying these interests through putting in place quality assurance practices and extensive innovation, the profit goes high. Employees are also given priority since they are important in directly influencing the company’s performance.

The interest of the employees is in career development and competitive compensation. To ensure that the interests of the employees are taken care of, the company has put in place good human Resource policies that balance work and help in satisfying employee needs. The company addresses the workers’ interests by high compensation that is very competitive as compared to other employers. One of the unique and major initiatives of Unilever in 2015 was the program of sustainable tea (Flammer, 2013). The Unilever partnered with Rainforest Alliance so as to source its PG and Lipton Tips tea bags from the farms. The method offered farms a method of differentiating their products as economically, socially and environmentally sustainable.

Multiple stakeholder orientation

The main aim of stakeholder management is to help in identifying stakeholder orientations on the bases of three attributes that define their legitimacy, power, urgency and claim. Defining stakeholder orientations is essential in the prioritization and identification of stakeholders by adopting a step by step method starting with preparations, internal stakeholder leadership team appointment for marketing, proper communication among other activities (Winter, 1977). Corporate social responsibility involves consideration of a range impacts and interests among various stakeholders. Daimler Company should embrace multiple stakeholder orientation so as to easily identify and prioritize the stakeholders effectively.

Beyond philanthropy

In some parts of the world, corporate social responsibility is all about philanthropy. This means that a company voluntarily carries out a specific responsibility towards the public without any external force. Currently, CSR is mandatory backed by laws and regulations and is shifting to strategic CSR or instrumentality from altruistic nature. The CSR has turned from being only in altruistic nature to more than being just philanthropy and development projects within a community. The CSR has impacts on HR management, profitability, logistic support and marketing that are important functions in business organization (Porter& Kramer, 2006). The CSR is more than being philanthropic because of its capacity to be strategic or instrumental in meeting the stakeholder expectation and helping in the achievement of company’s objectives. Therefore, CSR has to be regulated and carried out as a normal business task.

The company gives students from disadvantaged backgrounds an opportunity to get education. Daimler Company should also invest more on communities as a way of giving back to the community as it helps in expanding the market hence business growth. Corporate social responsibility is also characterized by set of strategies and practices dealing with social issues.

Practices and values

For many people, CSR is also about set of values which underpin these practices, namely, philosophy. Such perspective is evident corporate social responsibility initiatives of collectivistic or communication societies that value cultural and traditional practices in their local communities (Moore, 1999).The CSR practices are affected or influenced by the values of managers. This is because the managers formulate the policies governing the CSR in the organization and hence their personal attitude affects their behavior as it is part of their individual character.

Theoretical concepts of corporate social responsibility

The stakeholder’s theory

This theory has been there since 1990s’ and has become famous and used as a challenge and direct alternative to shareholder value theory (Maon, Lindgreen&Waen, 2009). The theory argues that there has been an increase in stakeholder pressure groups since 1960s’ and therefore the force impacted on business due to stakeholder development must not be ignored or underestimated. Business ought to be pragmatic and ethical and it assumes more interest of stakeholders than shareholders interest. The theory emphasizes social interests related to the company.

Business ethics theory

The theory is based on moral duty and wider social obligation of the business towards the society. The theory makes justification of CSR on three different but interrelated ethical issues. The issues include: Emerging and changing social responsiveness and the social expectations towards a certain social problem, intrinsic and external ethical values that are always triggered by Kantian ethics and then denoted as some universal and normative principles like fairness, social justice and human rights; and corporate citizenship which refers to the corporation of someone in a certain society as a better citizen so as to contribute to the social well-being (Mcwilliams&Slegel, 2001). This theory views corporate social responsibility more as ethical and philanthropic responsibilities than economic and legal. Daimler Company should voluntarily engage in community based activities and facilitate them as this has proven to be a good way of doing business.

Shareholder value theory

The perspective of shareholder value theory was denoted by someone known Nobel Laureate Friedman in 1970 and it argues that business profits are only developed by business’s social responsibility while adhering to the legal norms (Szekely, & Knirsch, 2005). Some Neoclassical economists assert that the aim of business is to do business that has positive contribution to the economy and society. The theory argues that the functions of the CSR differ from those of other social functions that are not profit oriented in other organizations. It is believed that managers of CSR are the corporation owners and stakeholders are the agents with a fiduciary duty of serving the shareholders’ interests. The business of making automobiles by Daimler Company should not only be profit oriented but should also have a positive contribution to the community. The company may decide to offer services to the community as this will expand its market. Also the shareholders need to be taken care of by getting shares from the company profits.

Strategic approaches used by Daimler

Daimler Company is a German truck, car and bus manufacturer. The company has adopted a corporate strategy that takes care of the interests of its shareholders. It gives more than 106, 9837,447 shares to the shareholders with about 289,321 people employed by the company in 2017 globally (Ihlen, 2011).Daimler Company is a big producer of premium cars and it is the world’s largest company that manufactures commercial vehicles. The company provides financing, insurance, fleet management, innovative mobility and leasing services. Daimler has supported various social activities in the world. The company has contributed to the advancement of the society and has in many ways helped, promoted and shaped its development creating recognizable benefits.

In the year, 2017, Daimler used millions of dollars on donations to various non-profit institutions and on much sponsorship of beneficial projects (Garriga, &Melle, 2009). The company supports its employees so as to improve their welfare. From the year 2016, the company has been extending a hand of help to non-profit projects so as to help the local communities. The company has a motto that takes care of the wellbeing communities. In the year 2017, many of Daimler’s employees left their offices and lent a hand to the communities by picking up garden rake, hammer and paintbrush. During this event, many social initiatives and institutions were supported ranging from hospitals, kindergartens to village organizations (Kuruez, Colbert &Wheeler, 2008).

Another commitment of the company’s employees to society is an initiative known as ProCent initiative. During this initiative, Daimler employees donate voluntarily some amount of their salary to beneficial projects in the society. In 2017, more than 800 thousand dollars were collected through this initiative (Moore, 1999). A portion of the amount was used to build a brand new playground for young patients at a hospital called Ortenau.

Daimler also supports various initiatives that help to strengthen many communities in their locations. The company supports labor market integration with what they call ‘bridge internships even to refugees in such locations. The company helps in facilitating access to education using programs such as Daimler Children’s university located in Sindelfingen and their Genius knowledge community.The company has also been in the forefront in helping to preserve natural habitat diversity for the future generations. Daimler has been supporting initiatives and projects carried near their locations by environmental organizations around the world. For example, the Global Nature Fund that helps to restore mangrove forests severely damaged in Asia (Morsing&Schultz, 2006).

Also specific funding programs and measures on environmental protection that take place near Daimler’s production area are also funded, for example; programs near Chennai located in southern India. The company works with the local organizations to help in the restoration of mangrove forests. Daimler Company has also been supporting another environmental project in cooperation with Global Nature Fund known as EcoKarst. The main aim of the project is to facilitate in the protection and contribute to the sustainable economic improvement of protected karst areas found in Danube region (Jackson, 2011). This helps to achieve a balance between the strengthening and maintenance of ecosystems.


Daimler should establish a recycling system with a closed loop. This system will help in direct collection of end of live vehicles from the customers. Then materials from the vehicles can then be recycled by suppliers for use in new vehicles. The materials include; aluminum, steel, glass and upholstery from C-class old Mercedes vehicle that can then be recycled to be used in a new vehicle of C-class. The benefits of recycling the materials will reduce energy; ensure good refurbishment and remanufacturing of vehicles that would be of cost advantage.

Daimler should also consider moving to a business model that is service-based. The company can start a lease mechanism for a long period of time instead of selling the vehicles to customers. The leasing method should be different from the normal traditional leasing where the vehicle is leased for a fixed period of time before being resold to another customer. In the new mechanism, Daimler should adopt a way where a customer is charged a specific monthly fee for driving the vehicle. This will ensure that the company retains the legal ownership of the vehicle and hence provision of lifetime warranty for the vehicle. Such program will ensure that all maintenance and repairs are done by the company with no extra charge to the customer. It will also allow recycling as the company will access the vehicle easily after its end of life is reached.

The company should also invest more in educating young and talented youths to allow innovation and opening of new possibilities. This will be a good way to develop the society which is an investment that is lasting. The education should be of the best interest of the communities as this will open their mind towards technology advancement. Lastly, Mercedes vehicles have been accused of diesel engine rigging done to prevent pollution caused by diesel engine high emissions. The company should instead install a special device that has the capacity to reduce the level of emissions. This will make the company environmentally responsible hence improving its reliability.

Summary and conclusion

Adoption of Corporate social responsibility creates a filter for the activities and actions of a company hence keeping the company ethical and accountable. It also encourages organizations to be aware of the effects and impacts brought on the society by the organization’s activities. Such awareness helps in the creation of sustainable development by facilitating effective delivery of social, environmental and economic benefits for all the stakeholders. CSR has several characteristics such as voluntary service delivery, practices and values, beyond philanthropy, multiple stakeholder orientation among others. For the success of any business, a good CSR that takes care of these characteristics must be adopted. Such characteristics are best explained by various theories such as the stakeholders’ theory and business ethics theory.It is essential that Daimler carefully adopts a good CSR that takes care of all these characteristics for it to succeed.


Flammer, C., 2013. Corporate social responsibility and shareholder reaction: The environmental awareness of investors. Academy of Management Journal, 56(3), pp.758 781.

Ganescu, M.C., 2012. Corporate social responsibility, a strategy to create and consolidate sustainable businesses. Theoretical & Applied Economics, 19(11).

Garriga, E. and Melé, D., 2004. Corporate social responsibility theories: Mapping the territory. Journal of business ethics, 53(1-2), pp.51-71.

Ihlen, Ø., 2011. Rhetoric and corporate social responsibility. The handbook of communication and corporate social responsibility. Malden, MA: Wiley-Blackwell.

Jackson, K.V., 2011. Towards a Stakeholder-Shareholder Theory of Corporate Governance: A Comparative Analysis. Hastings Bus. LJ, 7, p.309.

Keys, T., Malnight, T.W. and Van Der Graaf, K., 2009. Making the most of corporate social responsibility. McKinsey Quarterly, 36, pp.38-44.

Kurucz, E.C., Colbert, B.A. and Wheeler, D., 2008. The business case for corporate social responsibility. In The Oxford handbook of corporate social responsibility.

Maon, F., Lindgreen, A. and Swaen, V., 2009. Designing and implementing corporate social responsibility: An integrative framework grounded in theory and practice. Journal of Business Ethics, 87(1), pp.71-89.

McWilliams, A. and Siegel, D., 2001. Corporate social responsibility: A theory of the firm perspective. Academy of management review, 26(1), pp.117-127.

Moore, G., 1999. Tinged shareholder theory: or what’s so special about stakeholders?. Business Ethics: A European Review, 8(2), pp.117-127.

Morsing, M. and Schultz, M., 2006. Corporate social responsibility communication: stakeholder information, response and involvement strategies. Business ethics: a European review, 15(4), pp.323-338.

Porter, M.E. and Kramer, M.R., 2006. The link between competitive advantage and corporate social responsibility. Harvard business review, 84(12), pp.78-92.

Székely, F. and Knirsch, M., 2005. Responsible leadership and corporate social responsibility: Metrics for sustainable performance. European Management Journal, 23(6), pp.628-647.

Winter Jr, R.K., 1977. State law, shareholder protection, and the theory of the corporation. The Journal of Legal Studies, 6(2), pp.251-292.

Company Law Question 1 Issues According to the facts, Marlow is both

Company Law

Question 1


According to the facts, Marlow is both the Executive and Managing Director. The key issue is to avoid any claims of breach of contract by the company when Marlow resigns. According to the constitution, the company is only allowed to provide advice to the companies that want to invest in IT. The approval of the board in order for the resignation to take place is another issue for determination.

Resignation Option

In order to determine the procedure for resignation, the first place to look is the articles of association of the company. Although the decision would be unilateral, Marlow would have to notify the company about his impending resignation. This allows them to look for a replacement. It has to include the reason, and an explanation of what he would like to do about his shares in the company. The fact pattern does not indicate whether the permission of the board is necessary. This means that the resignation would take effect when it is officially communicated to the directors. The company has to pass a resolution on the resignation that was communicated by the director. If the board delays or refuses to pass the resolution, the resignation would not take effect.

However, courts have held that the minute that the board is notified, the director is deemed to have resigned. This is unless the constitution of the business requires permission from the board for the director to resign. The fact that the company is unlisted means that there would be less impediment to any resignation by the director. In the resignation letter, Marlow can opt to put the resignation subject to the permission of the board. It is important to avoid placing the approval as a condition. This is because if they reject the resignation, then Marlow would be forced to continue with his duties.

The identifiable reasons that would allow Marlow to resign from the company are twofold. In the first place, he believes he has identified a more promising career opportunity. In particular, he is going to be part of another venture. The other explanation is the disagreement with the board about the future direction that the company should take. Marlow has the option of selling, transferring or keeping his shares in the company. The constitution of the company is the key in identifying whether the resigning director has to dispose of his shares. However, since the fact pattern is silent on the issue, it means the choice is up to Marlow on what to do with his shares. He could choose to continue holding the shares and remain a member of the corporation.

Corporations Act 2001

The statute prevails over any articles of association made by the company. This is unless the law has deferred to the agreements by the corporation as governing the particular aspect. In section 194, it details the voting method when a director has a proprietary interest in the investment opportunity. It requires that the first issue is that the director has to reveal his interest in the matter. This involves explaining the amount and how it relates to the company. If it was applicable to this situation, my answer would change. I would advise Marlow that he does not need to resign. This is because he can vote for the opportunity despite any objections by his partners. Since he owns sixty-seven percent of the shares, he can push the transaction through. He would have to call a meeting of the board then disclose his interest before requesting for a vote.


Bhagat, S., Carey, D.C. and Elson, C.M., 1998. Director ownership, corporate performance, and management turnover. Bus. Law., 54, p.885.

Birds, J. ed., 2004. Boyle & Birds’ Company Law. Jordans.

Deakin, S.F., Morris, G.S. and Morris, G.S., 2005. Labourlaw(p. 386). Oxford: Hart publishing.

Question 2

Salomon V Salomon Case

The plaintiff had established his company and changed it from a sole proprietorship. The members were his family, including himself. The corporation paid Salomon for the transfer through a secured debenture. When the company was being liquidated, Salomon’s fee placed him at a priority to creditors who did not have security. Since Salomon owned the majority shares, the creditors sued him intending to extend the liability to Salomon. The House of Lords ruled that because it was incorporated, the company was a separate person. Salomon could therefore, not be held personally liable for any debts incurred by the corporation.

Advantages and Disadvantages of Incorporation

The first type of company they could form is a private limited company. In this case, the members have full liability for any debts incurred. This means that when winding up, the shareholder’s assets could be seized to pay the creditors. The first advantage of incorporation is that it sets up the company as a legal person. This means that it would be separate from its shareholders. In essence, they would not be liable for any activities of the corporation. The second advantage is that even on death of the members, the company would continue to exist. It is also possible for a company to own property. The other advantage is that it can sue or be sued. The public limited company is another option. This means they would open their shares to the public. It can raise finances through numerous methods such as sale of shares, debentures or get bank loans easily. The main disadvantage of a company is the high cost of setting it up. There are numerous fees for the lawyers and necessary paperwork. A company belongs to the shareholders according to the number of shares they hold. Any sale of their shares would mean that they lose power in running the affairs of the company. This is because they would be submitted to a vote of the shareholders. It would also result in a board being set up, which may not include Sam and Ellis. It is possible for the court to lift the veil and attach liability for the company’s actions to the shareholders themselves.


Hamlin, F., 1972. Advantages and disadvantages of incorporation. The Veterinary clinics of North America, 2(3), pp.449-462.

Rea, R.C., 1963. Advantages and disadvantages of incorporation. Journal of Accountancy (pre-1986), 115(000004), p.80.

Question 3

Corporation Act 2001

Section 588GA discusses any measures undertaken in order to save the company. The provision takes effect when a person learns that the company may end up insolvent. It then provides for the acceptable actions in order to rescue it. The section defines the better outcome as a result in which the administration or liquidation would not happen immediately. This includes delaying the insolvency of the corporation. The other requirement in order to rely on the provisions of the section, it is necessary for the individual to take the actions within a reasonable period. It imposes the evidentiary burden on the individual responsible. It also sets out the method of determining whether the activities would lead to a better outcome for the corporation. I will review whether Lola can rely on the statutory protection offered.


In this case, Lola meets the first two requirements since she was advised about the possible outcome of insolvency. It is also evident that her actions were made with the intention of saving the company. It means she wanted a better outcome. She started her activities in May, and the company was wound up in September. She delayed the liquidation by about four to five months. Since she was informed in late April and implemented them in May, the period taken is less than thirty days. This means that she acted within a reasonable period of time. In the first place, Lola informed herself of the financial position of the company. By convincing the Chief Financial Officer to resign, she also took steps to ensure there would be no misconduct by employees of the organization. By giving the books to the accountant, Lola took steps to ensure that the financial records of the corporation were kept appropriately. Considering the small nature of the business, it is evident that she chose a method of keeping records that is consistent with the size of the business. The mentor has to satisfy the condition of being a qualified individual. It is evident that the plan was intended to rescue the corporation by improving its position financially.


Finch, V. and Milman, D., 2017. Corporate insolvency law: perspectives and principles. Cambridge University Press.

Swire, P.P., 1993. Reply: Safe Harbors and a Proposal to Improve the Community Reinvestment Act. Virginia Law Review, pp.349-382.

353FIN: International Finance Managing Exchange Rate Risk Exchange rate risk (ERR) can

353FIN: International Finance

Managing Exchange Rate Risk

Exchange rate risk (ERR) can be characterized as the inherent risk that firms, with some aspects of international operations, are exposed to for holding or dealing in currencies other than their local units especially in an environment where future exchange rates are uncertain (Ross, et al., 2016). As such, managing these ERRs has become an important part of international trade. The management of ERRs is important to firms for three primary reasons: 1) It allows them to mitigate on the volatility of costs, cash flows and earnings. In unhedged transactions; an exporter who receives payments in foreign currency can realize a reduction in earnings if the local currency appreciates against the foreign unit. 2) It can reduce agency costs when the firm incentivizes the management (agent) to act in the best interest of the shareholders (principal) by implementing certain risk management strategies such as hedging against ERR (Brealey, et al., 2011). 3) It can increase the value of the firm, through capitalization of arbitrage opportunities or from the positive investments that are made possible by the elimination of volatility in net cash flows from operations (Fabozzi & Peterson, 2003).

It is imperative that firms identify the different types of ERRs and evaluate the degree of exposure as part of their risk assessment and mitigation efforts. There are three forms of currency risks:

Transactional risk is the exposure of local firms to exchange rate fluctuations in their transactional dealings with other foreign firms. The uncertainty of future movements of the exchange rate can result in a transactional loss or gain. For instance; a UK firm importing supplies from China, with payments in Yuan, will record a transaction gain from an appreciation of the Pound as less of it would be required to clear the transaction.

Translation risks arise from a translation of foreign subsidiaries’ balance sheet items into the local currency (Goel, et al., 2011). The translation of net assets and net earnings from foreign branches are subject to conversion into their local currency equivalent, and as such, a firm can record a gain or loss on these items.

Economic risks are exposures on the firm’s future net cash flows from exchange rate fluctuations. These risks are long-term, and can impact the competitiveness, profitability or value of the firm based on their impact on the firm’s future cash flows potential.

Hedging Strategies in the Reduction of Exchange Rate Risk

Having established the importance of mitigating on ERRs; firms will employ various measures to reduce their exposures-transactional, translational or economic. These mitigation measures range from invoicing in local currency, netting off obligation to reduce amounts exposed to ERR to hedging activities. Hedging refers to the use of derivatives to reduce exposure to ERRs (Ross, et al., 2016). Derivatives are simply financial instruments whose value is derived from an underlying asset of commodity such as Gold, Stocks or Sugar. The common hedging strategies are:

Currency forwards

These are binding, contractual agreements where the local firm commits to buy or sell an agreed amount of foreign currency in the near future, for an agreed exchange price (forward rate) today. When the agreed future date arrives; the local firm can choose to physically deliver or take up the foreign currencies -outright forward- or settle off cash balances- non-deliverable forwards- with its counterparty to the forward (Papaioannou, 2006). Currency forwards are quite commonplace in business given flexibility, minimal regulatory red-tape and ability to mitigate on transactional exposure to ERR. Assuming a local UK firm wants to import a $1.32 million heavy machinery from the US, but concerns over BREXIT continue to pile downward pressure on the Pound Sterling (GBP). If the spot rate (current exchange rate in the markets) is $1.32/£, then the UK firm can approach its US counterparty and commit to purchase $1.32million at an agreed forward rate of $1.30/£ to facilitate purchase of the heavy machinery. In essence; the UK firm has utilized a currency forward to reduce exposure from a depreciating GBP below the agreed forward rate. Of course, there is still the risk that the GBP could appreciate against the USD which would translate to a transactional loss to the UK firm.

Currency futures

In principle; currency futures are operated in a similar manner as currency forwards, but only in a more structured format. These futures are traded on exchanges such as the Chicago Mercantile Exchange (CME) or London International Financial Futures and Options Exchange (LIFFE) (Ross, et al., 2016). Firms trading in futures, buy or sell specified volumes of foreign currency complete with specified regular settlement dates (Papaioannou, 2006). These makes futures less flexible in comparison to forwards, but the former has more liquidity and reduced counterparty risks since settlements are handled in a clearing house.

Unlike currency forwards; currency futures afford firms more predictability in their prices as these are marked daily, and settlement can be done on any particular date up to the date of contract maturity. For instance; a US importer who purchases two Swiss Franc futures worth SFr 250,000 (2×125,000) from the CME, commits to buy the foreign currency in June (maturity date) at a stated settle price (USD selling price) of $1.05/SFr. The US firm therefore locks in the dollar cost at 262,500 for buying 250,000 in Swiss Francs up to end of June thus reducing the cost volatilities that could be brought about by unfavourable exchange rate movements

Swap contracts

These are agreements by counterparty firms, local and foreign, to engage in the exchange of cash flows over a period of time. There are three main forms of swap contracts –credit default swaps, interest rate swaps and currency swaps (Ross, et al., 2016). Currency swaps are commitments to exchange a set of payments in local currency for another in foreign currency. In interest-rate swaps; the set of payments involved are the interest obligations from issued debts (Mishkin, 2004).

Assuming Tesco PLC (UK) wants to invest in France, and Carrefour (French firm) wants to expand its operations into UK. Tesco PLC can issue a 5-year €12million commercial paper at 2.5%. On the other hand; Carrefour issues a 5-Year £15million 3.5% bond. To mitigate on negative currency movements that would increase their interest obligations, the two firms can engage in an interest rate swap where Tesco assumes the payment of Carrefour’s annual interest obligations of €525,000 (3.5%×15M) in the UK, and in exchange, Carrefour meets Tesco’s quarterly interest payments of £300,000 (2.5%×12M). In essence; Tesco will be meeting her actual interest obligation of £300,000 using €525,000, translating to a swap rate of €1.75/£. Similarly; at the end of five years; Tesco will settle the principle due for Carrefour in the UK and vice versa.

Currency options

Similar to future, currency options are traded in the exchanges at spot market rate- spot price. But unlike futures or forwards, currency options confer a right/ option, not obligation, to buy or sell a specified amount of foreign currency at an agreed fixed price (exercise/ strike price) over a given period till maturity (Mishkin, 2004). The right to buy or sell, conferred to the option buyer, carries a value that the buyer pays for as a premium (option price). Call options confer the right to buy whereas put options confer the right to sell, fixed amounts of foreign currency at stated exercise rates (Ross, et al., 2016).

Assuming Airbus (France) wants to hedge against rising jet fuel prices, denoted in USD ($1.25/€) and currently trading at $62.50 per barrel in the international markets. Airbus could purchase a 90-day call option for 500,000 barrels of oil at an exercise rate of $1.20/€, but at an option cost of €28million (a premium of 1,958,333). If the dollar strengthens, further pushing oil prices upwards and appreciating against the Euro to $1.00/€, then Airbus can exercise its call option and buy 500,000 barrels of oil at €28M instead of the current market rate of €35,000,000. Therefore, by exercising the call option, Airbus will have hedged against ERRs to a tune of €7million.

Operational and Financial Hedging

Export-oriented firms can utilize the principles of hedging to cushion their operational and production activities against foreign currency risks in what is characterized as an operational hedging strategy (Brealey, et al., 2011). Operational hedging allows for the diversification of ERRs through a range of non-financial techniques from offshoring of production to outsourcing of non-core operational expenses to the export markets. This represents an exposure trade-off as the transaction and economic risks are significantly reduced, but translation risks are increased (Döhring, 2008). In contrast; financial hedging is the utilization of financial instruments (derivatives) such as currency forwards, futures, swaps or foreign currency borrowings to mitigate on the ERRs. Financial hedging is most appropriate to address all the three exposures to currency risks, as short term derivatives –forwards and futures- are utilized to hedge against transaction and translational risks whereas currency swaps hedge against economic risks. In light of this Treanor and others, in their analytical paper on the US airline industry, established that operational hedging could be implemented as a primary risk management strategy, and finanical hedging being introduced in a complementary manner to fine-tune of the risk management framework (Treanor, et al., 2013). In similar complementary use; Döhring (2008) observed that firms could deploy financial hedges to cover short term currency risk exposures as they are more flexible, whereas operational hedges which involve the geographical diversification of operational activites could be rolled out against more longer-term exposures currency risks. In circumstances where only one form of hedging can be pursued; financial hedging will be most favored over operational hedging given the higher sunk costs for the later, as well as flexibility and effectiveness of the former in reducing ERRs. However; under normal market conditions; the two forms of hedging outgh to be applied as complements with operational hedging covering long-term exposures whereas finacial hedging covers shorter-term ERRs.

There is growing consensus in modern finance theory that risk management strategies such as the utilization of operational and financial hedging could increase the value of the firm. This is a departure from the classical finance theory under perfect markets (Modigliani & Miller, 1958) which suggested that risk management had no correlation to value of the firm. However; the existence of corporate taxes, financial distress and agency costs, makes a case for the need of risk management. Hedging activitis can add value to the firm by shielding the primary drivers of firm value –cash flows, revenues and net earnings- from adverse events (Treanor, et al., 2013). Currency future can reduce the volatility of cash flows associated with exchange rate movements, thus availing more funds to the firm to invest in projects that would yield a positive return and increase firm value (Chod, et al., 2010). Similarly; Call options can be used to stabilize revenues from freign subsidiaries, and enhance the amount that is finally delivered to shareholders as dividend.


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